Insurance and purchasing used cars

Thinking about buying a used car? Congratulations! Whether you’re upgrading your current ride or purchasing your first vehicle, it’s an exciting time. But before you hit the road, there’s one important step you can’t skip: making sure your new-to-you car is properly insured.

Let’s walk through what you need to know to protect your purchase and your peace of mind.

What’s the best way to insure a used car?

Insuring a used vehicle depends on multiple factors — the car’s age, its purchase price, and how much protection you want. Plus, if you’re financing your purchase, your lender may have specific requirements, like having collision or comprehensive insurance. You may also want to consider gap coverage for certified pre-owned vehicles or other relatively new or expensive cars.

What insurance do I need for a used car?

Car insurance that includes a combination of coverages can give you financial peace of mind if you’re in an accident. For example, bodily injury liability insurance — typically included in your base policy — offers protection if you’re held liable for others’ injuries. Add on optional collision and comprehensive insurance, and you could have coverage that goes beyond state-required minimums to help protect you from costly repairs, medical bills, and liability expenses. Let's take a closer look at these important coverages.

Bodily injury liability insurance

Bodily injury liability coverage helps cover medical expenses for injuries to your passengers, the driver and passengers of the other vehicle, and even pedestrians. It can also help pay legal fees if you’re taken to court.

Collision insurance

Collision coverage added to your base policy can help pay for repairs or replacement if your car is damaged in an accident, regardless of fault. It helps protect you whether you collide with another vehicle or hit an object — like a tree, guardrail, or mailbox.

Comprehensive insurance

By adding comprehensive coverage to your auto policy, you’ll have protection against events other than collisions. This smart coverage, minus the cost of your comprehensive deductible, assists with damages such as those caused by:

• Theft
• Hitting an animal
• Vandalism
• Fires or explosions
• Hail and damage from other natural disasters
• Floods

Do I need insurance before I buy a used car?

If you’re new to buying a car, getting insurance can feel overwhelming. In some cases, you may be able to drive your new car for a few days under your current coverage. However, requirements vary, so check with your agent to make sure you’re protected from day one.

The good news is, it’s quick and convenient to simply call your insurance company while still at the dealership to let them know you just bought a new vehicle. Within minutes, they can make the necessary changes on your policy so you can drive off the lot with confidence that your new ride is covered.

Can I get gap insurance on a used car?

Gap insurance — also known as loan or lease assistance coverage — helps pay the difference between your car’s actual cash value and the amount you owe on your auto loan if your vehicle is totaled in a covered accident. Since cars can depreciate as much as 20 percent in a single year, you could end up owing more on your car than it’s worth, and that’s where gap insurance can help.

It is possible to get gap insurance on a used car — in fact, your lender may even require it to approve your financing. Adding it to your new or updated auto policy is easy and efficient — and it may save you money, too, since buying it from the dealership can be costly. Connect with an American Family agent to explore your options and find the right protection for your needs.

Learn more about auto insurance requirements for used cars

Getting the right coverage for your car is all about making informed decisions. Your American Family Insurance agent is here to help you understand your options. Reach out while you’re still shopping for cars, and we’ll help you find coverage that’s the best fit for you.

This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal or financial advice. You should contact a professional for advice specific to your situation.

This information represents only a brief description of coverages, is not part of your policy, and is not a promise or guarantee of coverage. If there is any conflict between this information and your policy, the provisions of the policy will prevail. Insurance policy terms and conditions may apply. Exclusions may apply to policies, endorsements, or riders. Coverage may vary by state and may be subject to change. Some products are not available in every state. Please read your policy and contact your agent for assistance.